IMPRESA Annual Report 2018 IMPRESA – SGPS, S.A. Publicly Held Company Share Capital Eur 84,000,000 Rua Ribeiro Sanches, 65 1200–787 Lisbon NIPC 502 437 464 Commercial Registry Office of Lisbon SINGLE MANAGEMENT REPORT 2018 In compliance with the requirements imposed by law regarding public companies, the Board of Directors of IMPRESA – Sociedade Gestora de Participações Sociais, S.A. hereby presents its SINGLE MANAGEMENT REPORT relative to the financial year of 2018. In doing so, the Board was careful to include sufficient elements and information for the shareholders and investors in general to be able to assess the activity of the GROUP IMPRESA, in a clear and objective manner within the respective horizon of intervention. A. Consolidated Accounts The consolidated financial statements were prepared according to IAS/IFRS provisions, as adopted by the European Union, which include the International Accounting Standards (IAS) issued by the International Standards Committee (IASC), the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and the respective SIC and IFRIC interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC) and Standing Interpretation Committee (SIC). 1. Executive Summary The accounts of 2018 are compared, up to EBITDA, with the proforma accounts of 2017. These were prepared by excluding the income and expenses that are estimated to be attributable to the portfolio of magazines sold in 2018 (see chapter 4 below) and consider the impact of IFRS 15 and of IFRS 9, as if these had been applied in 2017. In 2018, IMPRESA returned to a positive net profit, having reached 3.1 M€, representing a strong improvement relative to the losses of 2017. Consolidated EBITDA came to 18.1 M€, representing a gain of 21.0% in relation to the proforma accounts of 2017. It is worth highlighting the good performance of SIC in operating terms, having reached an adjusted EBITDA of 21.3 M€, which represents an increase of 9.6% in relation to the proforma accounts of 2017. The total revenues of the IMPRESA Group reached 172.2 M€ in 2018, corresponding to a decrease of 2.2%, and compensated lower operating costs in 4,4%, relative to the proforma accounts of 2017. 2 Net remunerated debt reached 179.2 M€ at the end of 2018, representing a year- on-year increase of 0,4% (0.8 M€), due to financing of IMPRESA building expansion project and investment in the new studios. SIC ended 2018 with an average share of 17.0%, maintaining its leadership in both commercial targets (A/B CD 15/54 and A/B CD 25/54) during prime time, with a share of 19.8% and 20.4%, respectively. At the end of summer 2018, SIC announced the hiring of Cristina Ferreira. “Programa da Cristina” debuted on 7 January, immediately recovering the leadership position in the mornings. In January 2019, SIC reached an audience share of 19.0%, having returned to its leadership position on weekdays, which it had last occupied in March 2015. The recovery of SIC's audiences began in October 2018, with the debut of the new programme "Julia", on weekday afternoons, and the entertainment show “Casados à Primeira Vista”, which immediately soared to the leadership position on Sunday nights, and the access to prime time, from Monday to Friday. In 2018, SIC Mulher reached a record audience, with a share of 1.0%. SIC Notícias once again stood out as the leading information channel, with a share of 1.9%, and among the subscription channels it reached a market share of 3.8%, identical to what was registered in 2017. SIC concluded a distribution agreement with Comcast, expanding the coverage of SIC International to the entire territory of the USA. At the end of 2018, IMPRESA launched the initiative SIC Ventures, with a view to diversifying its sources of revenue. Through SIC Ventures, SIC aims to, in exchange for advertising space, acquire minority stakes in start-ups. The first initiative was the acquisition of the site Volante SIC, and Zaask was the second start-up to be selected. EXPRESSO continued to be the best-selling newspaper in Portugal, with an average of more than 86 thousand copies sold, according to data from the APCT with reference to 2018. EXPRESSO is also the leading Portuguese publication in paid digital circulation, having sold on average more than 25 thousand copies per edition in 2018. In the beginning of 2019, Expresso has changed its traditional plastic bag, for a paper bag, more environment friendly, thus reinforcing its sustainability. 3 Table 1. Main Indicators Pro-forma (a) (Values in €) Dec/18 Dec/17 var % Dec/17 ch % Total Revenues 172 162 757 176 060 868 -2,2% 201 821 209 -14,7% Television 145 309 942 150 200 875 -3,3% 153 704 664 -5,5% Publishing 24 273 158 23 664 091 2,6% 46 170 642 -47,4% InfoPortugal & Others 2 135 721 2 319 889 -7,9% 2 319 889 -7,9% Intersegments 443 936 -123 987 n.a -373 986 n.a Operating Costs 154 052 740 161 093 598 -4,4% 188 005 778 -18,1% EBITDA 18 110 017 14 967 269 21,0% 13 815 431 31,1% EBITDA Margin 10,5% 8,5% 6,8% EBITDA Television 20 001 532 17 899 068 11,7% 17 617 403 13,5% EBITDA Publishing 1 188 370 -105 541 n.a. -975 714 n.a. EBITDA Infoportugal & Others -3 079 885 -2 826 258 9,0% -2 826 258 9,0% EBITDA (2) (w/reestructuring) 20 192 046 18 909 524 6,8% 19 176 794 5,3% Net Profit 3 139 284 - n.a. -21 654 037 n.a. Net Debt & Leasings (M€) 179,2 178,4 0,4% 178,4 0,4% Note: EBITDA = Operating Results + Amortisations and Depreciation + Provisions + Impairment in non-current assets. Net Debt = Loans (ST+MLT) - Cash and Cash Equivalents + Financial Leases. (1) Does not consider Amortisations and Depreciation, Provisions and Impairment Losses in non-current assets. (2) EBITDA adjusted for restructuring costs, with 2,1 M€ in 2018. (a) The proforma accounts of December 2017 were prepared by excluding the revenue and expenses that are estimated to be attributable to the portfolio of magazines sold in 2018 and consider the impact of the adoption of IFRS 15 and IFRS 9, as if these had been applied in 2017. 4 2. Analysis of the Consolidated Accounts As of January 2018, IFRS 15 was adopted, with reference to the recording of income from contracts with customers. The application of this standard led to a decline in operating income and expenses, by the same amount, for IMPRESA, having had no impact in terms of cash flow. Furthermore, as of 1 January 2018, IFRS 9 was adopted, which had a residual effect on the operating results of 2017, presented for comparative purposes. In January 2018, the portfolio of magazines was sold to TiN for the agreed amount of 10.2 M€, whose accounting impact was still recorded in the annual accounts of 2017. The proforma consolidated accounts relative to 2017 also reflect this change, up to the operating results item. The sale is part of the execution of the Strategic Plan for the 2017-2019 period, and the repositioning of IMPRESA's activities to focus principally on audiovisual and digital components. At the end of 2018, IMPRESA achieved consolidated revenues of 172.2 M€, which represented a 2.2% decline in turnover in relation to the proforma accounts of 2017, with all revenues having fallen in 2018, in consolidated terms, with exception of advertising. Table 2. Total Revenues Pro-forma (a) (Values in €) Dec/18 Dec/17 var % Dec/17 ch % Total Revenues 172 162 757 176 060 868 -2,2% 201 821 209 -14,7% Advertising 111 929 215 111 582 074 0,3% 119 275 588 -6,2% Channel Subscriptions 36 857 597 39 287 723 -6,2% 43 129 491 -14,5% Circulation 9 326 920 9 603 328 -2,9% 22 910 919 -59,3% Others 14 049 026 15 587 743 -9,9% 16 505 212 -14,9% In relation to the proforma accounts of 2017, operating costs at the end of 2018, without considering amortisation, depreciation and impairment losses in non-current assets, fell 4.4%. This positive result came about due to a decrease in programming costs, less IVR activity, as well as lower restructuring costs during 2018. At the end of 2018, the consolidated EBITDA came to 18.1 M€, a gain of 21.0% in relation to the proforma accounts in the same period of the previous year, with an improvement being recorded in all areas. EBITDA adjusted for restructuring costs came to 20.2 M€, a gain of 6.8% relative to the adjusted proforma accounts in the same period of the previous year. The volume of amortisations fell 3.6% in 2018, still not reflecting the investment undertaken in the expansion of the IMPRESA building and new studios. In 2018, the investment in the expansion of the IMPRESA building continued, with the construction of television studios, which will enable the Publishing and Television activities to be brought together in the same building, thus benefiting from inherent synergies and lower operating costs. At the same time, with the construction of the new studios, the entire technological infrastructure of television was renewed. This project was launched in 2016 5 and was concluded at the end of January 2019. On January 27 th, 2019, all SIC channels started to broadcast from the new studios, in the IMPRESA building, in Paço de Arcos.